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The Royal Bank of Scotland Group plc Message Board

  • barco5979b barco5979b Nov 9, 2009 9:49 AM Flag

    Preferreds - Pricing Differences

    I sold my RBS-L today for $11.60/sh. I see others such as RBS-G, M, S and E, all selling in the $8.50 range. All are non-cumulative. I do not get it, why the difference?

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    • How does one interpret this paragraph in the 11/3 RBS Press Release on their website on the settlement with the government on "Asset Protecthion Scheme?"

      Requirement that RBS shall not pay investors any dividends or coupons on existing hybrid capital instruments (including preference shares and B Shares) or exercise any call rights in respect of such existing securities for a two year period unless there is a legal obligation to do so. The extent and timing of this obligation and the securities which it will impact is subject to further discussion between RBS, HM Treasury and the EC.

      Agreement reached in principle

    • Someone really thinks these are going to be announcing the dividend next week at the rate they have been rising this week.

      Even though I only needed 3-4 more months to get capital gain tax rates, I sold half my "H" position just now because I still think there is still decent risk of suspension depending on how distributable profits is interpreted.

      Still in, just with a lightened load (was WAY over-leveraged anyways).

    • Note: item 1 and 2 above show these to be subordinated liabilities, not equity, note the "non-discretionary coupon" wording.

      Now, Item 3 below is the current dividend policy, from page 282 of the glossy cover verion of the ABN annual report. I am not posting from the trust preferreds prospectus, but they require dividends to be paid if any dividends to common are paid. ABN ARMO is paying a dividend to Santander for asset sales, and does that qualify as a dividend to shareholders? If so, it would appear the divi for the trust preferreds must be paid. Page 282 of the annual says such a divi is a divi to shareholders:

      Dividend policy

      ABN AMRO’s policy is to pay dividends on ordinary shares taking account the Group’s capital position and
      prospects.
      In this context, the Group expects to pay dividends to RFS Holdings in conjunction with the release of capital
      arising from the sale, or transfer to Consortium Members, of ABN AMRO’s businesses to as part of the
      separation process to enable RFS Holdings to pay dividends to its shareholders

    • Item 1, in the message I'm responding to.

      Item 2: ABN annual report (not the glossy covered version), page 116, debt classification of these:



      Issued debt and equity securities

      Issued debt securities are recorded on an amortised cost basis using the effective interest rate method, unless they are of a
      hybrid/structured nature and designated to be held at fair value through income.
      Issued financial instruments or their components are classified as liabilities where the substance of the contractual arrangement results in the Group having a present obligation to either deliver cash or another financial asset or to satisfy the obligation other than by the exchange of a fixed number of equity shares. Preference shares that carry a non-discretionary coupon or are redeemable on a specific date or at the option of the holder are classified as liabilities. The dividends and fees on preference shares classified as a liability are recognised as interest expense.
      Issued financial instruments, or their components, are classified as equity when they do not qualify as a liability and represent a residual interest in the assets of the Group. Preference share capital is classified as equity if it is non-redeemable and any dividends are discretionary. The components of issued financial instruments that contain both liability and equity elements are accounted for separately with the equity component being assigned the residual amount after deducting from the instrument’s initial value the fair value of the liability component.
      Dividends on ordinary shares and preference shares classified as equity are recognised as a distribution of equity in the period in which they are approved by shareholders

    • By the way, own quite a few G's here so optimistically long.

    • See announcement yesterday from ABN ...http://www.abnamro.com/pressroom/pressreleasedetail.cfm?releaseid=423558; guess the question remains can they "create" these 2 banks and have the RBS bank insufficiently capitalized such that it cannot service its obligations; anything is possible but this would seem to be unlikely-especially with these public statements that capital will be sufficient. Having said this, the market clearly believes otherwise with the G's trading around $8.63; so what does that "market" know that we don't at this point

    • Sold all my RBS H's. Even though they are booked as debt instruments, I was worried that there would be no distibutable profits or reserves to cover the divvy and the Board would find a way, with their accountants and the EU and Kroes, to suspend the divvy.
      Just my opinion, no facts to support it beyond a gut feeling.
      Others have, and will, disagree.

    • Although the format is off, here is the 2008 Annual report listing of the G,E, and I Trusts as liabilities.

      "The following table lists the subordinated liabilities issued by other Group companies:
      2008 2007
      USD 1,285 million 5.90% Trust Preferred V 921 844
      USD 200 million 6.25% Trust Preferred VI 143 132
      USD 1,800 6.08% Trust Preferred VII 1,290 1,161
      BRL 250 million floating rate subordinated notes 2013 1 – 95
      Total 2,354 2,232
      1 Transferred to Banco Santander S.A in July 2008."

    • ABN's, the RBS E, G, I:

      1. ABN AMRO is subject to EC review pertaining to the Dutch Government purchase/infusion that has caused the EC to demand and obtain the selling of some assets; to the Duetsche Bank. The deal is cut, must be voted on my the Dutch Parliament. A related filing on the Dutch outline for the EC is due, due, due. Maybe this week.

      2. Nothing on coupon suspension by EC related to ABN AMRO to date. Dutch Gov purchase is the only item of focus.

      I own em. I'm not recommending them. I don't need a legal opinion. IMO, they are listed by ABN AMRO as a sub debt obligation and the coupon in the accounting is interest not a dividend, per their financials (I'd posted the page some time ago here).

      Can they cut the divi on these.

      Soon enough we'll have 20/20 hindsigt, and I'll be mixing the drinks for Maverick and myself. A Wake or a victory.

      cheers,

      jack

    • has been hard to see why these are trading so low given the guaranty in place from ABN Holding and other parity requirements; this is one of the most complicated, convoluted structures I have seen; has anyone requested legal counsel to review this prospectus; has there been any direct comment by our dear friend, Mr Kroes or her cohorts regarding ABN securities ala the other comments we have seen on RBS, ING, AEH etc.?

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